tag:blogger.com,1999:blog-2335748440449035592.post7223968062521598978..comments2008-04-08T23:26:29.385-04:00TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2335748440449035592.post-4867779371638543792008-04-08T23:26:00.000-04:002008-04-08T23:26:00.000-04:00I'm staying in Omaha and hanging out with Warren Buffett until this crisis gets better. :)Shenghttp://www.blogger.com/profile/01519985991268471033noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-85627536347017652062008-04-08T14:21:00.000-04:002008-04-08T14:21:00.000-04:00Yes, I am amazed at how low prices generally are. THey simply must go up.<BR/><BR/>The problem in the industry is the serial bankruptcies. Company emerges from bankruptcy, has debt wiped away, and then competitors who do have debt must compete on price. So company who just emerged from bankrupty has clean balance sheet and can build up new debt. That causes the other companies trying to compete to build up their debt but they are starting from a higher debt starting point since they have been out of bankruptcy longer. This forces them into bankruptcy. Which allows them to clear their balance sheet. Then they re-enter the market, with clean balance sheet, and forces the same situation to the company that forced them into bankruptcy. Its just a broken model. <BR/><BR/>At some point we should say, look you go into bankruptcy twice, we liquidate all your assets, and you are done. Or 3 times. Whatever the number.<BR/><BR/>The spoke and model system is also quite convuluted. Anyhow the bigger picture is we have been in an era of deflation thanks to cheap labor/goods from Mexico and then Asia. As those countries emerge and need to pay attention to safety, their own inflation (which requires higher wages), etc - they are beginning to import inflation to us. So it is systematic. Unless we can move entire supply chains from 1 country to another every 5 years, in search of ever cheaper labor... hence why Indonesia and Vietnam are where some are setting up shop since China at 43 cents an hour labor is getting "too pricey". But in the long run as China becomes its own consumer market - i.e. the money they already have their (transferred from Americans who overconsume mostly) is creating an upper and middle class. That middle and upper class will want to consume - so that will create a market for lower class laborers... and so on. So for now they still are dependent on exports to a large degree, but as each day passes more and more of their product will be for self consumption... leading to more strain on all world resources. So they are not totally decoupled or even near, but as each year passes they will become more so. As will India. And then we have 2.5 billion people creating their own economy, sucking up resources. While our 300M are fighting over abortion,what country we should invade next (still have time to take out Iran before GWB is out!), gun rights, and if gays should marry. <BR/><BR/>Our priorities are backwards. Really the underlying theme here is there are billions of people striving for a better life, led by (not perfect) governments who subsidize their lifestylesw with cash we send them by overspending each day. That will come back to haunt us in the end. Our assets will be plucked away over time - even Buffet says so. He is not a dummy. But our direction in leadership role has no long term vision - only getting re-elected so all long term to these people are is "4 to 6" years. Go google "lula" from Brazil and read about the stuff he does (not perfect) but what a different brand of leadership. I'm not sure where this compassionate conservatism went? The only solution to every problem is reduce taxes on the wealthy so that they create new jobs for the poor. Very dogmatic and uncreative. Not that the Dems have been doing a darn thing either... so we continue on our merry path... whistling past graveyard. Rest of world will care less as each year passes.TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-89268662268833021422008-04-08T13:45:00.000-04:002008-04-08T13:45:00.000-04:00TraderMark: Nice post; on the airline issue just think about this: have airfares gone up in the last 20 years? I would say, "no". The fares for me to fly from here to there are about the same over; you can always find a deal somewhere. I suspect airlines have been able to achieve this by keeping wages low and cutting back on services; even then they have not been profitable. What is interesting from a chart perspective is the monthly chart of the Amex Airline Index; currently, price is bouncing around near or below its all time lows last seen in 2003. One would think that a bounce is in the offering but with oil still over $100 it would seem unlikely to amount to much.Guyhttp://www.blogger.com/profile/09198161809721597881noreply@blogger.com